In recent years, across the world in places such as Honduras and Malaysia, there has been a growing trend of so‑called “private cities,” in which not only governments but also private investors and companies are deeply involved in the development and management of cities. In Honduras, the corporate city “Próspera,” which has its own tax and judicial systems, was founded with funding from Silicon Valley※1 investors. In Malaysia, part of the artificial island “Forest City” has become a hub for a self‑governing community led by tech entrepreneurs.

These “private cities” are more than just real estate developments. They highlight questions such as how to balance the public nature of cities with private profitability, who sets the rules of the city, and who bears responsibility to the people who live there.

What is a private city?

In conventional cities, people’s lives and services are organized within the framework of laws and administration set by the national or local government. In democracies, citizens can elect those national or local governments and demand accountability from them. In contrast, in private cities, private entities design their own rules, administrative functions, infrastructure, and public services and provide them to residents. That said, these cities are not completely independent from the state. Rather, while located within a country’s territory, there is a tendency for private actors to take over some of the functions—such as regulation, public services, and the judiciary—that have traditionally been handled by national or local governments. Behind this lies the idea of avoiding restrictions stemming from government regulations and administrative procedures, and of achieving freer and more efficient city management through private capital and decision‑making.

In practice, similar but distinct concepts are often conflated, such as “charter cities,” “startup cities,” “special economic zones (SEZs),” and “free zones.” Charter cities are urban districts operated under a separate “charter” independent of the existing national legal system, a concept initially proposed by economist Paul Romer. Startup cities, while overlapping with charter cities, focus on city‑building by private actors in sectors such as tech. They treat the city itself as a single “product” or “business” and position it as a testing ground for new regulatory and administrative systems.

Special economic zones (SEZ) more generally refer to areas where tax incentives and deregulation are permitted, with Hong Kong, Shenzhen, and Dubai often cited as representative examples. “Free zones” is a term frequently used for areas focused mainly on preferential measures for trade and customs, and they are sometimes treated as a type of special economic zone.

One of the terms used in connection with these forms of urban development is “private city.” A defining feature is that private actors handle everything from development to governance in an integrated way, with companies designing and operating not only infrastructure such as roads, electricity, and water and sewage, but also administrative functions such as regulation, security, and dispute resolution. It is said that there are already more than 120 similar projects worldwide, meaning this is by no means a peculiar phenomenon limited to a few countries. Put differently, what should in principle be a “public good” belonging to all residents—the city—is increasingly being run around the world as the “private property” of a limited set of investors.

Why seek to break away from government control?

What many of these cities share is not merely the novelty that “the private sector builds a city.” Historically, many cities have emerged organically or formed around private commercial activity. The real question is why investors and companies today are trying to create cities that deliberately escape existing governmental regulations and democratic decision‑making frameworks.

First, for companies and investors, environmental regulations, labor laws, and tax systems can at times restrict profits and business freedom. Urban development also requires building consensus with residents and legislatures, which can slow the progress of projects. Private cities aim to ease such regulations and procedures and to create environments in which companies and investors can design urban rules more freely.

Second, there is the goal of maximizing profits and access to data. In private cities, even infrastructure and services that would normally be publicly operated—water, electricity, waste disposal, and so on—are run by private companies and woven into profit‑making schemes through fees charged to residents. And for a single entity to be responsible for the entire operation of a city also means holding all types of data in one hand, not just concerning such infrastructure but also residents’ taxes, consumption, movement, and communications. This data in turn can be monetized to generate further corporate profits through advertising, service development, and business expansion outside the city. It has been pointed out that the management policies of private cities tend to be designed in ways that prioritize “the managers’ profits” over “the needs of residents.”

Third, underlying this trend at a deeper level is a more fundamental way of thinking: viewing cities not as “public spaces managed by government,” but as “products” or “platforms” that companies can freely design and modify. This goes beyond the practical complaint seen in point 1—that “regulations are bothersome”—and instead treats the very mechanism of decision‑making via elections and legislatures as an “inefficiency” that can be bypassed.

In the U.S. state of Nevada, billionaire Jeffrey Berns, who heads a blockchain company, most directly embodied this idea when he asked the state to establish an “Innovation Zone” system that would transfer powers over taxation, policing, and public services to the company. In the envisioned “Blockchain City,” spanning roughly 271 square kilometers of desert, the plan was for administrative functions themselves to be designed as a corporate department. The new city project “California Forever” in the state of California lies on the same conceptual continuum. In 2023, it was revealed that LinkedIn co‑founder Reid Hoffman and others had invested over USD 800 million via a shell company to acquire more than 210 square kilometers of farmland east of San Francisco.

Private cities that have been realized

The artificial island of Forest City in Johor, Malaysia is a massive urban development launched in 2016 by Chinese real estate giant Country Garden, with a total value of USD 100 billion and an initial plan to accommodate 700,000 residents. However, the project has been drastically scaled back due to factors such as China’s real estate slump and has been dubbed a “ghost town.” In August 2024, the Malaysian government designated this area a “Special Financial Zone (SFZ)” within the Johor–Singapore Special Economic Zone (JS‑SEZ), introducing tax incentives such as a 5% corporate tax rate and a 15% income tax rate for knowledge workers in an attempt to revitalize the development. However, this is merely a system for granting tax benefits within the framework of Malaysian law, and in nature it differs from Honduras’s ZEDE, which has its own judicial system and police.

Using this Special Financial Zone framework, tech entrepreneur Balaji Srinivasan opened a private community called “Network School” in September 2024. Under the slogan “Learn, Burn, Earn, and Have Fun,” the facility offers co‑living arrangements akin to a hotel at a monthly fee of USD 1000–2000. Engineers from more than 80 countries gathered there, and the number of participants expanded from the initial 128 to around 400. In August 2025, Srinivasan revealed that he viewed this site as an experimental ground for a “startup society” that could replace the nation‑state.

However, this experiment did not last long. In July 2026, authorities in Johor shut the facility down, stating that Network School was operating without a valid business license. The developer Country Garden has emphasized that no tenant is exempt from Malaysian law, licensing requirements, or regulatory oversight. This incident shows how a private community that tried to exploit a “loosely regulated space” in the form of a tax‑incentive zone ultimately ended up being policed by ordinary domestic law. Srinivasan has since announced that he will move his base to Kazakhstan.

Proposed private cities

Whereas the cases of Honduras and Malaysia involve locations where people actually live and operations have begun, in other regions there are movements that remain at the stage of proposals and concepts.

In the United Kingdom, in October 2025, entrepreneur Shiv Malik and co‑founder Joe Reeves unveiled plans to build a new city called “Forest City 1” for up to 1,000,000 people on farmland in Suffolk between Newmarket and Haverhill in the east of Cambridge. The plan envisions building 400,000 homes on about 182 square kilometers of farmland, and claims that combining a special economic zone (SEZ) with a community land trust (CLT) will allow them to offer housing at 60% below market prices.

According to leaked internal messages, the developers were considering creating a “development corporation” through an Act of Parliament, whereby appointed officials—not elected residents—would handle the allocation of land. The board of the land trust was also to be permanently appointment‑based, with no elections whatsoever. One of the co‑founders reportedly explained the reasoning by saying that “democratic choices often run counter to long‑term interests.”

However, the plan has not yet been formally submitted, and the UK government has stated that it has “no current plans to establish a development corporation.” Locally, there have been voices of opposition over the loss of valuable farmland and historic villages.

Similar ideas are being discussed in the Arctic as well. In 2025, it emerged that some Silicon Valley investors were proposing Greenland as the site for a lightly regulated “Freedom City”. Unlike the cases in Honduras, Malaysia, and the UK, this concept does not yet even have a concrete legal framework proposed. This is because Greenland is currently an autonomous territory of the Kingdom of Denmark, and for the plan to materialize, the United States would first need to acquire sovereignty over Greenland itself. Indeed, in some of the investors’ visions, the city would be built on U.S. federal land, making it clear that the idea assumes U.S. acquisition of sovereignty.

President Donald Trump has repeatedly mentioned the possibility of the U.S. purchasing Greenland or otherwise acquiring it by force. However, both the Danish government and the Greenlandic self‑government have clearly rejected any transfer of sovereignty, and a public opinion poll of Greenland’s residents shows that around 80% oppose becoming part of the United States. Investors are said to be sketching out visions that include technological infrastructure such as artificial intelligence, autonomous driving, a space launch site, and small modular reactors. However, this too is only at the stage of being an unofficial proposal by some investors, and no land acquisition or construction has actually begun.

Issues of sovereignty and legal authority

Among the problems posed by private cities, one of the greatest concerns the nature of national sovereignty itself. Under Honduras’s ZEDE system, designated areas were granted greater autonomy than ordinary administrative districts, with a framework enabling operating companies to build their own regulatory and judicial systems. The mere existence within a single country of such jurisdictions—including their own courts—raises boundary issues over how far the state’s governing authority extends.

Subsequently, in 2022, the Honduran government abolished the ZEDE legal framework, but in response the company operating Próspera lodged an objection and filed a massive investment arbitration claim against the Honduran government with the International Centre for Settlement of Investment Disputes (ICSID).

This case shows that the question of how far legal and administrative powers can be delegated to private operators extends beyond domestic governance to involve the relationship between national legal systems and international investment regimes.

Issues of democracy and accountability

At the root of the sovereignty issue lies a more fundamental question. In typical cities in democratic countries, residents elect mayors and councils, and these representatives determine how the city is run. What makes private cities fundamentally different is that this basic premise—that residents choose their rulers—does not exist. As we saw in the previous section, both Próspera’s Council and Network School’s operating company derived their authority from investors and founders, not from elections, and their primary objective in decision‑making is placed on returning profits to investors rather than on the public interest of all residents.

What these two cases share—despite their completely different scales and natures—is that urban decision‑making was entrusted to investors and operators without systems allowing residents to choose their rulers or to challenge management. In both cases, the ultimate resolution came when existing states intervened in this structure. This idea—that spaces can be reshaped by external capital and technology while the people governing them are absent—extends beyond cities and, as we will see later, reaches into reconstruction schemes for conflict zones.

In Honduras, the Office of the United Nations High Commissioner for Human Rights (OHCHR) expressed concern in 2021 that the ZEDE system could pose serious risks to the state’s human rights obligations. The OHCHR also estimated that ZEDEs could ultimately cover about35% of the country’s territory. International organizations thus expressed concern over the scale of governing authority that could be delegated to investor‑run companies without residents having the usual means—such as elections or public hearings—to raise objections. In September 2024, the Honduran Supreme Court also ruled that the laws enabling such ZEDEs were unconstitutional.

Inequality and “neo‑colonialism”

Those who lead private city projects are often not local residents but wealthy individuals and investors from distant countries. Particularly in low‑income countries, incoming investors tend to wield overwhelming financial power, while the bargaining power of host governments and local communities is weak, making it easier for investors to secure favorable conditions such as tax breaks, independent judicial systems, and large‑scale land use. The autonomous jurisdictions thus created are run in ways that are almost independent from the country’s laws and regulations, and as a result, national sovereignty and residents’ original access rights to land and resources are gradually eroded. Because this structure resembles the power dynamics once seen between colonial powers and colonies, it has been criticized as “neo‑colonialism”※2.

Those most affected by this problem tend to be people who already lack bargaining power over land and institutions. In Honduras, it has been reported that in disputes over land rights related to ZEDEs, Indigenous peoples, Afro‑Hondurans, and farmers continue to be particularly vulnerable to land seizures and forced evictions. The International Labour Organization (ILO) has also launched its own investigation after reports that opponents of ZEDEs among Indigenous and Afro‑Honduran leaders were persecuted and killed.

However, this does not mean that all private cities are uniformly neo‑colonial. It is necessary to look at specific power relations in each case: who owns the land, who sets the rules, who benefits from those decisions, and to what extent local residents can participate in decision‑making.

A future of building “alternatives to the state”?

Underlying the private cities we have examined is a more ambitious ideology: the idea of using technology to bypass state governance structures—such as elections, laws, and sovereignty—and creating spaces in those gaps where investors and the wealthy can freely make rules and reap profits.

One of the people who has systematized this idea is the aforementioned Balaji Srinivasan. His concept of the “network state” envisions communities that share a common vision online first building an economic zone via cryptocurrencies, then gradually acquiring physical territory, and ultimately seeking recognition as a state. Technologies such as AI, digital IDs, and cryptocurrencies are positioned in this vision as new means of governing people without going through elections or legislatures. Some observers have noted that parts of this thinking intersect with ideological currents that are skeptical of democracy itself.

This thinking surfaced in its most extreme public form in 2025, when President Trump mentioned a plan for a “Freedom Zone” in Gaza. The idea was to remove the processes of resident governance and consensus‑building from devastated land in areas destroyed by Israel and to redevelop it as a high‑tech special zone. The plan, accompanied by AI‑generated videos of futuristic cities posted by the president himself, drew global criticism. By 2026, it was reported that the plan had effectively collapsed due to insufficient funds, political conditions, and local consent. However, the notion that the people living there do not decide the nature of their city themselves, and that instead external politicians, companies, and the wealthy use technology and capital to design new forms of urban life and governance, is a concept shared with other projects.

Conclusion

What private cities are spreading around the world could be called the “privatization” of cities as public goods. Private cities, by loosening regulations and using private capital, have the potential to generate new urban forms that would have been difficult to realize through conventional urban development. Yet, as we have seen in this article, these are cities that operate without the mechanisms that ordinary cities naturally possess—mechanisms by which residents choose their rulers and can challenge decisions.

The scope of state sovereignty becomes blurred; control lies not with residents but with investors; and the burden often falls on those who had little bargaining power to begin with. Who governs the city, and how are the rights and wishes of those who live there guaranteed? The spread of private cities goes beyond the pros and cons of urban development and forces us to revisit more fundamental questions of democracy and sovereignty: for whom, and by whom, are cities built in the first place?

※1 Silicon Valley: A region in the U.S. state of California where IT and technology companies are concentrated.

※2 Neo‑colonialism: A state in which external powers or corporations exert influence over another country or region’s policies, resources, and decision‑making by exploiting economic and political power imbalances, rather than through direct colonial rule.